ON EVE OF TAX DAY, SCHUMER URGES FREE ELECTRONIC TAX FILING FOR ALL TAXPAYERS DIRECTLY WITH IRS

Joint Economic Committee Analysis Reveals Taxpayers Would Save Over a Billion Dollars Annually with Free E-filing; E-filing also Reduces Errors Dramatically from Standard Paper Filing

IRS Agreements with Software Companies Allows Them to Monopolize Efiling Market; Will Prevent IRS from Reaching E-Filing Goal of 80% by this Year

Washington, DC: On the eve of tax day, U.S. Senator Charles E. Schumer (D-NY), the chairman of the Joint Economic Committee (JEC), released a JEC fact sheet revealing that free e-filing would save taxpayers and the federal government billions of dollars and reduces tax return errors dramatically. Online tax filing is clearly the easiest, cheapest,and most efficient way for Americans to pay their taxes. Sen. Schumer today called on the IRS to offer free e-filing for ALL taxpayers to save taxpayers and the federal government money and to meet the IRS goal of 80% e-filing as soon as possible.

 “This report shows that paying a fee for the ‘privilege’ of filing your taxes, costs taxpayers and the IRS billions of dollars,” Sen. Schumer said. “The bottom line is that the IRS is imposing an additional ‘tax’ on people paying their taxes, when billions could be saved by both if e-filing were free for all taxpayers.”

The Joint Economic Committee analysis includes a state-by-state breakdown for how much taxpayers spent in 2006 to file their taxes online and also charts the progress of efiling from 1995-2006. The full JEC paper can be found at: Free E-Filing Makes Sense For Both Taxpayers and the IRS

Though filing electronically saves the IRS millions of dollars – fees are imposed to do so, although more expensive to process paper returns do not have an additional charge. The IRS made agreements with paid tax preparers and software companies to not offer free filing because the companies were concerned it would hurt their business. In exchange for the IRS staying out of the software business the companies agreed to offer free electronic filing for people whose income is under $52,000. Everyone else has to pay to e-file by going through a third party, even though the e-filing system saves the taxpayer and the government money. Even those who qualify for free filing must go through an incredibly complicated system to e-file and may be pushed into buying other services for additional fees from third party preparers.

 

 Free E-filing Saves Money: Taxpayers can save over $1 billion annually in e-filing fees if taxpayers earning more than $52,000 could e-file for free. For the IRS, there are enormous cost savings from e-filing. While processing each paper return costs $2.65, an e-filed return costs only $0.29.

E-filing Reduces Errors: The IRS finds roughly 1 error in every 100 returns filed electronically (regardless of whether the return was prepared professionally of selfprepared by the taxpayer), compared to about 1 error in every 5 paper returns.

E-filing Is Easy: Filing income tax returns electronically also has significant advantages for taxpayers. Filing online is more convenient, return processing is faster, and refundscan be sent out more rapidly.

Sen. Schumer will be sending a letter to IRS Commissioner Mark Everson today to communicate his concerns over the e-filing program.

 

The JEC e-filing analysis can be found by clicking here.

The Joint Economic Committee, established under the Employment Act of 1946, was created by Congress to review economic conditions and to analyze the effectiveness of economic policy.

www.jec.senate.gov

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SCHUMER: ALL STAKEHOLDERS IN SUBPRIME MORTGAGE MESS MUST BE RESPONSIBLE FORHELPING HOMEOWNERS AND COMMUNITIES HIT HARDEST BY FORECLOSURES

Joint Economic Committee Report on Subprime Mortgage Bolstered by New Realtors Report Showing Falling Home Prices Due to Rising Foreclosures

White House Blamed Homeowners for the Subprime Mortgage Mess When Confronted with Schumer’s Call for Immediate Federal Action

Washington, D.C. – U.S. Senator Charles E. Schumer, Chairman of the Joint Economic Committee, expanded on statements from a news conference to release a JEC subprime mortgage report, a new National Association of Realtors report and today’s Los Angeles Times story where the White House took the opportunity to blame homeowners for signing up for deceptive subprime mortgages. The JEC report, entitled “Sheltering Neighborhoods from the Subprime Foreclosure Storm,” argued that foreclosure prevention is cost-effective and it was bolstered by yesterday’s Realtors’ report that indicated that housing prices nationwide are in decline. The JEC report also urged policy makers to act to both prevent future foreclosures and mitigate the negative impact of current home foreclosures. The report revealed scores of seriously affected communities nationwide.

Schumer said, “Much like the infamous Daily News headline, this White House hasbasically said to homeowners facing foreclosure: Drop dead.”

According to the Los Angeles Times this morning, White House spokesman Tony Fratto said "individuals need to make smart decisions in taking on debt, and there has to be some responsibility for making those decisions." He also said that any federal action would be unwelcome and would only encourage risky behavior.

Schumer noted that fast government action to coordinate emergency funds, including federal money, could prevent massive foreclosures around the country. “One of the best ways to avert a terrible foreclosure storm is for the federal government to coordinate stakeholders to create an emergency set of public and private funds to assist in the refinancing process for 2 families in need. “Taxpayers should not be on the hook for deceptive practices by dubious mortgage brokers, but the federal government has a responsibility to protect those who were taken advantage of and also intervene where the markets have failed,” Schumer stated.

Schumer continued, “The report by the National Association of Realtors yesterday echoes the fundamental findings of our report, with increased subprime mortgages being foreclosed and lower home prices, we must act quickly to prevent a potential economic disaster for families, communities, and markets.”

 

 The JEC report found:

  •  Subprime foreclosures are expected to increase in 2007 and 2008 as 1.8 million hybrid ARMS—many of which were sold to borrowers who can not afford them—reset in aweakening housing market environment.
  • Varying local economies, housing markets and state regulatory regimes mean that some local areas are getting hit by the subprime foreclosure crisis much harder than others and deserve immediate attention.
  • It pays to prevent foreclosures in these high-risk cities – every new home foreclosure can cost stakeholders up to $80,000, when adding up the costs to homeowners, lenders, neighbors, and local governments; while foreclosure prevention costs estimates are about $3,300 per household.
  •  Policy responses to the subprime crisis should be designed to address the local foreclosure phenomenon and include both foreclosure prevention strategies and improved mortgage lending regulations.

The full report can be found at www.jec.senate.gov.

The JEC report argued that preventing foreclosures is cost-effective and recommends increasing federal support for local foreclosure prevention programs and strengthening and reforming the FHA.

The JEC report also suggested a number of policy proposals to prevent a reoccurrence of a large number of unsuitable loans originated by inappropriate lending practices, including:

• Better regulation of mortgage origination at the federal level;

Establishing a federal anti-predatory lending law that bans unfair and deceptive practices;

Establishing a borrowers’ ability to pay standard; and

Requiring plain language, bold disclosure practices for all mortgage products.

The Joint Economic Committee, established under the Employment Act of 1946, was created by Congress to review economic conditions and to analyze the effectiveness of economic policy.

www.jec.senate.gov

 

NEW JOINT ECONOMIC COMMITTEE REPORT REVEALS SERIOUS LOCAL ECONOMIC IMPACT OF SUBPRIME MORTGAGE FALLOUT ACROSS COUNTRY
 
Report Exposes Numerous Localities in Danger of Increasing Subprime Foreclosures; Each New Foreclosure Could Impose $80,000 in Costs to Families, Communities, and Businesses
 
JEC Chairman Schumer:  ‘As Lenders Try to Protect Their Bottom Lines, We Need to Protect American Families and Communities Too’
 
Washington, D.C. – U.S. Senator Charles E. Schumer, Chairman of the Joint Economic Committee, joined by Senators Sherrod Brown (D-OH), Bob Menendez (D-NJ), released a report today analyzing the subprime mortgage foreclosure problem and its economic impact on the most vulnerable communities nationwide.  The report, entitled “Sheltering Neighborhoods from the Subprime Foreclosure Storm,” argues that foreclosure prevention is cost-effective and presents policy suggestions for curbing future subprime foreclosures.  Schumer was joined by other members of the Joint Economic Committee and Senate Banking Committee as they pointed to the report’s finding scores of seriously affected communities from the Rust Belt, to the Sun Belt, to the Northeast. 
 
Sen. Schumer said, “As subprime mortgage lenders scramble to protect their bottom lines, we need to redouble efforts to protect American families and communities who are at the losing end of this mess.  The subprime mortgage meltdown has economic consequences that will ripple through our communities unless we act,” Schumer said. “It makes good economic sense to make sure our families and neighborhoods are protected from rogue lenders and lax government oversight.”
 
Increases in payment delinquencies and foreclosures in the subprime mortgage market have raised widespread concerns about the possibility of increasing, concentrated foreclosures throughout the country. While lenders and banks figure out how to insure themselves from the consequences of increased subprime mortgage defaults, local communities are also struggling to stem the tide of foreclosures that impose significant costs on families, neighborhoods and cities.
 
Some of the key findings of the JEC report are:       
  • Subprime foreclosures are expected to increase in 2007 and 2008 as 1.8 million hybrid ARMS—many of which were sold to borrowers who can not afford them—reset in a weakening housing market environment.
  • Varying local economies, housing markets and state regulatory regimes mean that some local areas are getting hit by the subprime foreclosure crisis much harder than others and deserve immediate attention.
  • It pays to prevent foreclosures in these high-risk cities – every new home foreclosure can cost stakeholders up to $80,000, when adding up the costs to homeowners , lenders, neighbors, and local governments.
  • Policy responses to the subprime crisis should be designed to address the local foreclosure phenomenon and include both foreclosure prevention strategies and improved mortgage lending regulations.
“No region of the country has been harder hit than the Midwest. And no state has a higher rate of foreclosed properties than Ohio. Almost one in four subprime loans is delinquent in the Cleveland area, and statewide it is one in five. Over the past decade, foreclosures have increased almost fourfold in Ohio. We are facing a full-blown housing crisis,” said Sen. Brown.
 
Sen. Menendez said, “What we are facing is a tsunami of foreclosures. Just a few short years after home ownership levels soared to record highs, the harsh reality brought on by unreasonable mortgages has come crashing down on millions of homeowners. This report digs past the overall story to detail the devastation in America’s communities. It is clear that a number of New Jersey communities have been hit hard, as have many others from coast to coast, and I am working in the Banking Committee to solidify the mortgage system. I applaud Chairman Schumer for shedding additional light on this widespread problem.”
 
The JEC report includes state and local rankings by foreclosures and delinquencies using RealtyTrac’s and First American Loan Peformance’s data.  The report shows that the Midwest “Rust Belt” (Ohio, Michigan, Illinois, and Indiana), the South and West “Sun Belt” (Florida, Georgia, Texas, California, Arizona and Nevada), and Colorado experienced the highest rates of foreclosures in 2006. The hardest hit metropolitan areas also include cities in the Northeastern corridor in New York, New Jersey and Pennsylvania.
 
The report also analyzes metropolitan areas that are most at risk of rising foreclosures, using February 2007 delinquency data, employment statistics, and housing market indicators. 
 
“All predictions are that we are facing a tsunami of default and foreclosures in the subprime market as homeowners face steep increases in their monthly payments and housing values remain flat, making refinancing virtually impossible,” said Rep. Carolyn Maloney (D-NY), Vice Chair of the Joint Economic Committee and Chair of the House Financial Services Subcommittee on Financial Institutions. “The specific local crises documented by this study require swift action at both the state and national level.  We will be looking closely at the report’s recommendations in the Financial Services Committee.”
 
The report argues that preventing foreclosures is cost-effective and recommends the following foreclosure prevention strategies for policymakers:
  • Increase Federal Support for Local Foreclosure Prevention Programs. In the short-term, local community-based non-profits may be best positioned to implement foreclosure prevention programs.  The federal government can assist established community-based organizations aid families facing foreclosure. Estimates suggest that foreclosure prevention costs approximately $3,300 per household, substantially less than the $80,000 in estimated costs of foreclosure. 
  • Strengthen and Reform FHA. The Federal Housing Authority (FHA) currently issues more than $100 billion in mortgage insurance annually for loans made by private lenders to low-income, minority and first-time buyers, but FHA has not provided insurance for borrowers in the subprime market.
 
The following policy proposals are being considered to prevent a reoccurrence of a large number of unsuitable loans originated by inappropriate lending practices:
  • Strengthen Regulation of Mortgage Origination at Federal Level.  Although bank lenders are subject to bank regulatory standards, mortgage brokers and loan officers in non-bank companies are not subject to federal enforcement of lending laws, only to state regulation. While some states have taken measures to improve the licensing and education requirements for non-bank brokers and lenders, many states could further enhance these requirements.  Federal standards could include licensing for individual brokers and lenders (not just companies) and minimum education and experience standards.
  • Create a Federal Anti-Predatory Lending Law that Bans Unfair and Deceptive Practices. Currently, no anti-predatory lending law exists at the federal level, but such a law is being considered in Congress. In the process, lawmakers should investigate whether they should prohibit certain types of harmful loan provisions and practices, like pre-payment penalties, stated income or low documentation loans.  In addition, lawmakers should also consider requiring all subprime loan borrowers to escrow property taxes and hazard insurance.
  • Establish Borrowers’ Ability to Pay Standard.  In the financial services sector, investors are required to meet a “suitability standard” prior to being allowed to invest in certain products, based on their ability to afford the risk. A similar test should be considered for mortgage borrowers and lenders.  Many exploding ARMs were approved based on the borrower’s ability to pay the mortgage payment during the initial “teaser” rate period, not over the life of the loan. A stricter standard to determine borrowers’ ability to make mortgage payments will protect homeowners and prevent foreclosures.
  • Enhance Disclosure Practices for Mortgage Products: The details of teaser rates, interest-only payments and “pick a payment” products should be clearly and effectively communicated to potential borrowers. These disclosures must be written in plain language and be prominently displayed in a manner that is clear and understandable to the borrower.  Enhanced disclosure practices should include a table that clearly displays a full payment schedule over the life of the loan, all fees associated with the loan, an explanation of the “alternative” features of the loan (i.e. negative amortization), and a full explanation of the risks associated with taking advantage of these features, including the timeframe in which borrowers are likely to feel the negative effects of such risks.

The Joint Economic Committee, established under the Employment Act of 1946, was created by Congress to review economic conditions and to analyze the effectiveness of economic policy.

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FEDERAL RESERVE CHAIRMAN BERNANKE TO TESTIFY AT JOINT ECONOMIC COMMITTEE ON THE U.S. ECONOMIC OUTLOOK

Schumer to Seek Insight from Fed Chair on Economic Risks of the Subprime Loan Defaults, Evolving Stance on Inflation and Economic Growth

Washington, D.C.U.S. Senator Charles E. Schumer, Chairman of the Joint Economic Committee, will hold a hearing on the United States’ Economic Outlook with Chairman of the Board of Governors of the Federal Reserve System, Ben Bernanke on Wednesday, March 28, 2007 at 10:30 am in 216 Hart Senate Office Building. Due to a conflict with a Senate Finance Committee hearing on China currency, Fed Chairman Bernanke agreed to adjust the start time of the JEC hearing. This will be the first Congressional appearance for Chairman Bernanke after the March 21 FOMC statement, which showed greater uncertainty about the future direction of the economy and Fed policy than previous statements but without specifically mentioning the subprime mortgage market. As the subprime loan market continues its downward spiral, trade deficits continue to be large and unsustainable and other economic news breaks, Sen. Schumer and the JEC members will ask Chairman Bernanke for his views and guidance on the economic outlook.

WHAT: Joint Economic Committee Hearing on “The Economic Outlook”

WHO: The Honorable Ben Bernanke Chairman, Board of Governors of the Federal Reserve System

WHEN: 10:30 a.m., Wednesday, March 28, 2007

WHERE: 216 Hart Senate Office Building

(PLEASE NOTE ONE HOUR LATER START TIME TO HEARING)

THE HEARING WILL BE WEBCAST AT WWW.JEC.SENATE.GOV

The Joint Economic Committee, established under the Employment Act of 1946, was created by Congress to review economic conditions and to analyze the effectiveness of economic policy.

www.jec.senate.gov

 

 

 

SCHUMER RESPONDS TO NEW ECONOMIC INDICATORS:  SOFTENING JOB GROWTH AND HUGE TRADE DEFICIT ARE TOXIC BREW FOR AMERICAN ECONOMY
 
President Bush Tied with Father for Worst Job Creation Record of Any President Since Hoover, Largest Trade Deficits in History
 
Despite Overall Smaller Trade Deficit Figures, Trade Imbalance with China Continues to Jump
 
Washington, D.C.U.S. Senator Charles E. Schumer, Chairman of the Joint Economic Committee, responded to new economic indicators released this morning on February’s employment figures from the Bureau of Labor Statistics and January’s trade balance numbers released by the Department of Commerce. 
 
Schumer said of the poor economic news overall, “Softening job growth combined with high trade deficits are a toxic brew for the American economy.”
 
According to the Bureau of Labor Statistics’ report on the February Employment Situation, job growth slowed as employers added only 97,000 jobs in February.  The unemployment rate edged down to 4.5 percent, but the labor force contracted by 190,000 people.
 
Schumer responded to the February employment report, “For over six years the Administration has been selling snake oil to Americans looking for jobs.  After just holding a JEC hearing on the staggeringly high unemployment figures for young African American males, these numbers make clear once again that job creation should be a top priority.”
 
The Department of Commerce reports that the U.S. trade balance was $59.1 billion in January, which is a slight reduction from December’s $61.5 billion.  Included in that figure was evidence that our January trade deficit with China was 19 percent higher than it was a year ago.
 
“It should raise red flags for this administration that while our overall trade deficit is slightly down, our trade deficit with China continues to explode.  That trend is particularly worrisome for our economic health and needs to be watched more closely than ever because of their undervalued currency and closed system of government,” Schumer said about our trade deficit numbers.
 
February’s Employment Report in Perspective:
  • President Bush is now in a virtual tie with his father for the dubious honor of having the worst job creation record of any President since Hoover.
  • When people not in the labor force who say they want to work and people working part time because they cannot find full-time work are included, the unemployment rate would be 8.1 percent.
  • Growth in payroll employment has been modest by the standards of past economic recoveries and has averaged just 68,000 jobs per month over the Bush Presidency. Job creation under President Clinton averaged 237,000 jobs per month.
  • February’s 4.5 percent unemployment rate remains higher than the 4 percent rate achieved in the expansion of the 1990s.
  • Under President Bush, 3.0 million manufacturing jobs have been lost.
  • Workers’ productivity (output per hour) has increased 17.5 percent since the beginning of 2001 while workers’ real (inflation-adjusted) average hourly compensation (wages plus benefits) has increased just 8.7 percent. 
  • Increases in health care premiums have increased benefit costs, resulting in even slower growth in real wages.
 
January’s trade deficit in perspective:
  • Although down slightly from the record pace set last year, when the annual trade deficit was $765 billion ($63.8 billion per month), the January trade deficit of $59.1 billion remains unsustainably large.
  • Imports of goods from China exceeded exports of goods to China by $21.3 billion in January.  That is an 18.8 percent jump from January 2006 in the monthly trade deficit with China.
 
The Joint Economic Committee, established under the Employment Act of 1946, was created by Congress to review economic conditions and to analyze the effectiveness of economic policy.
 
 
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 SCHUMER URGES NEW POLICIES TO GIVE MIDDLE CLASS FAMILIES A CUSHION IN THE ROLLER COASTER ECONOMY
 
Recent Downturns in Manufacturing, Stock Market, and Greenspan Recession Prediction Highlight Need for Policies to Address Family Income Volatility, as JEC Hearing Testimony Illuminates
 
Schumer, McDermott to Offer Wage Insurance Bill to Give Working Families Additional Stability in Light of Technological and Trade Hurdles Their Jobs Face
 
Washington, D.C.: U.S. Senator Charles E. Schumer, Chairman of the Joint Economic Committee, held a hearing on wage and income instability today with experts testifying that many middle class families are experiencing ups and downs in their yearto-year earnings and income, and their economic instability may be greater than in the past due to the consequences of globalization and technology. The hearing examined new policies like wage insurance and income averaging to empower workers to manage both temporary earnings losses and more permanent declines.
 
Sen. Schumer is working with Rep. Jim McDermott (D-WA), Chairman of the Ways and Means Income Security and Family Support Subcommittee, on a wage insurance proposal to be introduced next month.
 
Below is Sen. Schumer opening statement as prepared for delivery:
Good morning. I would like to thank our witnesses and guests for attending today, and I want to welcome the new Vice Chair, my colleague from New York, Mrs. Maloney. I look forward to working closely with her to use this Committee as an engine for generating economic policies that will work to deliver the benefits of economic growth to all Americans.
Today, we are at a critical juncture in U.S. economic policy. We know that the upheavals caused by technological change and international competition most acutely affect those who are gaining the least economically—the middle-class and those who aspire to get there. Yet in order for us to expand trade and make significant technological investments to help grow the economy, the middle-class must feel that they will benefit. Right now, too many of them don’t.
 
Working at a large corporation for thirty or forty years that takes care of you and your family for a lifetime is becoming a thing of the past. Employers are now shifting the high costs of health care and the burden of saving for retirement onto families. And increasingly, jobs are being automated away by technological advancements or moved overseas -- leaving many displaced workers and their families behind.
 
Meanwhile, official numbers on the economy have been positive – at least until very recently. But we must face the reality lurking behind the official numbers in order to address anxiety on Main Street.
 
Not only have wages significantly lagged behind productivity over the past two decades, but they are increasingly more volatile as workers bounce in and out of jobs. Between 2003 and 2005, nearly 4 million workers were laid off from jobs they held for more than 3 years. About half of these workers and their families took a pay cut, and nearly one-third lost 20 percent or more of their prior earnings. And if the recession in the manufacturing sector that hit our radar screens this week spreads through our economy-- the economic rollercoaster for families will only get worse.
 
Income volatility can cause major upheavals for families, on top of the changes they are facing in the workplace — they could be forced to sell their homes, or to discontinue health care coverage. Income volatility also leaves families feeling unsettled about their family’s and their country’s economic future.
 
We need a new policy direction to meet the challenge of income instability. We must start by strengthening the safety net that helps displaced workers rebound from job losses that occur through no fault of their own.
 
We have asked our witnesses on the second panel to share their recommendations for doing just that. This morning, our experts will explore new policies like wage insurance and income-averaging, as well as ways to strengthen our existing unemployment insurance and Trade Adjustment Assistance programs.
 
We also need to do everything we can at the federal level to spur the development of high-quality, high-paying jobs to replace the jobs lost in declining segments of the economy or through advancements in technology. We need to make serious investments in our most promising industries for future growth, like renewable energy and life sciences.
 
And we need to help our displaced workers acquire the skills and experience they will need to succeed in the new jobs created. We will investigate opportunities for creating good jobs in more detail in a series of JEC hearings in the coming months.
 
But right now, middle-class families need help dealing with the tectonic shifts that technology is causing; they need help dealing with the forces beyond their control that are changing their lives. They don’t want handouts, but they need a hand.
 
I know we will have some disagreements over particular solutions to this problem of income instability, but I hope that we will all prioritize the need to help our families mitigate the new risks they face and achieve their aspirations. And I look forward to working closely with all of you to do just that.
 
I’ve said before that the JEC would seek insight and advice from the best and that’s what we have to offer here again today. I will now introduce today’s panelists.
 
Panelists at today’s hearing were:
 
First Panel:
Peter Orszag, Director, Congressional Budget Office
 
Second Panel:
Lael Brainard, Vice President and Director, Global Economy and Development, The Brookings Institution
Maurice Emsellem, Public Policy Director, National Employment Law Project
Lily Batchelder, Assistant Professor of Law & Public Policy, New York University School of Law
Bradley R. Schiller, Professor, School of Public Affairs, American University
 
The Joint Economic Committee, established under the Employment Act of 1946, was created by Congress to review economic conditions and to analyze the effectiveness of economic policy.
 
www.jec.senate.gov
# # #
JOINT ECONOMIC COMMITTEE ANNOUNCES FIRST MAJOR HEARING ON WAGE INSURANCE
 
JEC Chairman to Spotlight Policies to Address Income Shocks for Middle-Class Families
 
Schumer: “We have to make sure that job disruptions caused by globalization become manageable transitions for families rather than the economic crises they too often are today.”
 
Washington, D.C.U.S. Senator Charles E. Schumer, Chairman of the Joint Economic Committee, will hold a hearing on wage and income instability TOMORROW, February 28th at 9:30 am in 562 Dirksen Senate Office Building.
 
Many American families experience substantial variability in their year-to-year earnings and income, and their economic instability may be greater than in the past due to the consequences of globalization and technology. This hearing will explore the extent of earnings and income instability faced by middle-class families in our dynamic economy and examine policies like wage insurance and income averaging to empower workers to manage both temporary earnings losses and more permanent declines. Senator Schumer is working with Rep. Jim McDermott (D-WA), Chairman of the Ways and Means Income Security and Family Support Subcommittee, on a wage insurance proposal to be introduced next month.
 
WHO: Peter Orszag, Director, Congressional Budget Office
Second Panel:
Lael Brainard, Vice President and Director, Global Economy and Development,The Brookings Institution
Maurice Emsellem, Public Policy Director, National Employment Law Project
Lily Batchelder, Assistant Professor of Law & Public Policy, New York University School of Law
Bradley R. Schiller, Professor, School of Public Affairs, American University
 
WHAT: Joint Economic Committee Hearing on “Meeting the Challenge of Income Instability”
 
WHEN: TOMORROW, February 28, 2007, at 9:30 AM
 
WHERE: 562 Dirksen Senate Office Building
 
The Joint Economic Committee, established under the Employment Act of 1946, was created by Congress to review economic conditions and to analyze the effectiveness of economic policy.
 
www.jec.senate.gov

SCHUMER: THESE ARE THE RECORDS WE DON’T WANT TO BE SETTING – 2006 MARKS HIGHEST OVERALL TRADE DEFICIT IN HISTORY

Deficit With China Increased 15 Percent Over 2006 And Sets New Record

JEC Chairman: “The Administration Needs To Take Action To Close Our Growing Trade Gap With China Before the Bill Comes Due”

Washington, D.C. – Both the overall trade deficit and the deficit with China broke record highs, according to a Joint Economic Committee analysis of Commerce Department data. The U.S. trade deficit widened unexpectedly to $61.2 billion in December, with $19.0 billion of that gap stemming from the deficit with China.

“These are the kinds of records the American people don’t want us to be breaking,” said Sen. Charles E. Schumer (D-NY), Chairman of the Joint Economic Committee. “The administration needs to move beyond words and take action now to reverse a trend that threatens our prospects for future economic growth. Someday the bill is going to come due, whether this administration admits it or not.”

The U.S. trade deficit set a record level for the fifth year in a row. For all of 2006 the deficit was $764 billion, which surpasses the record deficit of $717 billion set for all of 2005.

The largest single contributor to the 2006 trade deficit was the $233 billion goods deficit with China (See chart). For all of 2005, the goods deficit with China was $202 billion. The U.S. trade deficit with China in the past two years was larger than the total U.S. trade gap as recently as 1998.

The Economic Report of the President released yesterday did not address the growing trade deficit. Rather, the President’s advisors included a chapter on “International Trade and Investment” emphasizing the advantages of open trade and investment and merely glossing over the anxiety and sense of insecurity that many Americans feel in the face of growing international competition. This month, Senator Schumer will hold a Joint Economic Committee hearing to examine policies that will be necessary to reassure the average American family that it can expect to share in the benefits of more open international markets.

The Joint Economic Committee, established under the Employment Act of 1946, was created by Congress to review economic conditions and to analyze the effectiveness of economic policy.

www.jec.senate.gov

 

 

 SCHUMER: BUSH ECONOMIC REPORT PAINTS ROSY PICTURE; IGNORES IMPACT OF TRADE DEFICIT, LOW SAVING RATE AND HIGH HEALTH CARE COSTS
 
JEC Chairman: “We Need to Shift Focus So That Working Americans Start To Feel As Good About Our Changing Economy As Those at the Very Top Do”
 
Washington, D.C. – Sen. Charles E. Schumer, Chairman of the Joint Economic Committee, today released the following statement about the 2007 Economic Report of the President:
 
“We can’t just put on a happy face and cross our fingers that wages will grow, trade deficits will shrink, savings rates will rise, and health care costs will slow as this administration is doing. We need to shift focus so that working Americans start to feel as good about our changing economy as those at the very top do. Only then will we have the economy we need to help us maintain our global leadership.”
 
A preliminary Joint Economic Committee analysis of the key chapters of the Economic Report of the President report follows:
 
Bush Administration to American Workers: “Don’t Worry, Your Pay Will Catch Up to Your Productivity”
 
The Economic Report of the President presents an upbeat picture of our recent economic performance, implying that the problems which produced the most protracted jobs slump since the 1930s, sluggish real wage growth, and widening inequality are now behind us. Buried in the Report, however, is an acknowledgement that negative personal saving and government budget deficits have produced a very low net national saving rate and that the share of employee compensation (wages and benefits) in national income has fallen while the share of profits is at an all-time high. The Report argues that these problems will right themselves, but the President’s policies do nothing to encourage more national saving or to see that the benefits of economic growth are spread more widely.
 
Bush Administration Continues to Ignore Record Trade Deficits, Disruptions Faced by American Workers
 
The Economic Report of the President does not address the trade deficit, which is expected to surpass 2005’s record $717 billion for 2006. Rather, there is a chapter on “International Trade and Investment” emphasizing the advantages of open trade and investment. The chapter merely pays lip service to the disruptions and dislocations that can take place in the short run and the anxiety and sense of insecurity that many Americans feel in the face of growing international competition.
 
The Report argues for the importance of renewing Trade Promotion Authority and successfully completing the current round of trade talks. It does not talk about the kinds of policies that will be necessary to reassure the average American family that it can expect to share in the benefits of more open international markets.
 
Bush Administration Wants Individuals, States and Health Care Providers to Cover the Tab for Rising Health Care Costs
 
In the report, the President’s advisors justify the health care proposals he unveiled in the State of the Union Address and the budget—a health insurance deduction that replaces the traditional employer-sponsored insurance deduction, and $101.5 billion in reduced spending on Medicare and Medicaid (over five years). Neither policy initiative gets at the root of today’s health care crisis – rapidly escalating costs. Since 2000, health care premiums have risen 87 percent, five times the rate of inflation. Instead, the administration’s reforms would pass the tab of rising costs on to individuals, states, and health care providers:
 
• The proposed health insurance deduction would weaken traditional employer sponsored health insurance, which benefits 175 million Americans, by extending the current tax incentive for such group coverage to coverage in the more costly (and risky) individual market. The plan would likely encourage more employers to drop coverage, throwing more people into the individual market before necessary reforms of that market are in place.
 
• Instead of reducing over-payments to private managed care plans that enroll Medicare beneficiaries in order to curb costs, the administration has budgeted $75 billion in reduced payments to Medicare, largely achieved by cutting reimbursements to health care providers like hospitals and nursing homes which are already running at low operating margins. The administration also plans to cut $26 billion from Medicaid largely by lowering federal matching funds, which will force states to absorb the cost burden.
 
The Joint Economic Committee, established under the Employment Act of 1946, was created by Congress to review economic conditions and to analyze the effectiveness of economic policy.